Introduction
The management practices utilized by a corporation have a significant impact on its performance. As a result, the foundation of an organization is its leadership and management styles. According to the leadership literature, there is a direct relationship between strong leadership and productive companies. Leaders are directly responsible for the success of an organization, as proven by both practical experience and scholarly research. Alan Mulally’s leadership at Ford Motor Company proves this argument. This section discusses the various leadership theories adopted at the firm.
Ford Motors were initially under an authoritative form of leadership before CEOs like Alan Mullaly came. Alan Brought about a rapid change in management and showed some level of care for employees. Leaders who followed Alan, such as Mark Fileds, James Hacket, and Jim Farley, have built on what Alan developed. He employed modular transformation as the main type of change management. Modular transformation changes normal operations significantly, especially when leaders apply the transformational style. The company changed from an old culture to a completely different one, where employees were recognized appropriately.
Background
Ford Motors has had several leadership changes over the years. The company acknowledged a multibillion-dollar loss when Alan Mulally came over as CEO in 2006 (Langerud & Jordan, 2020). The corporation could earn a profit for the next five years after that. It has come a long way since its humble origins in 1903. Henry Ford founded it with a $28,000 investment and 11 company partnerships (Langerud & Jordan, 2020). Ford Motor Company was doing well until Edsel Ford died in 1943. When Edsel died, Henry Ford had to come out of retirement and take over as president of the company because there were major problems with the way it was being run.
After Henry Ford ran the company for two years, it lost a lot of money, and Henry Ford II took over in 1945. Ford II made the company profitable again and gave Robert McNamara, who worked in the planning and financial analysis division, the power to change the way Ford managed and led (Langerud & Jordan, 2020). At that point, Ford’s management style shifted from coercive, authoritarian control to commercial oligarchy (Langerud & Jordan, 2020). According to Verbeke and Fariborzi (2019), Ford’s leadership had changed 11 times before Alan Mulally took over as CEO. The company had faced periods of stability and instability because of different leadership styles with different leaders. Among all Ford’s leaders, Alan Mulally is the most known for his positive contributions through his exceptional leadership styles.
Ford’s Management Style
Henry Ford’s most famous invention was the assembly line, which he introduced to the automobile industry. His greatest victory was demonstrating that market leaders do not have to be the first; they only have to be the best. As CEO, Henry Ford increased worker pay and cut automobile prices (Tomac, Radonja, & Bonato, 2019). The corporation raised their employees’ compensation to keep them satisfied and engaged.
Despite his reputation for dictatorial administration, Ford never wavered from his goal. He was supposedly involved in all significant company decisions and monitored employees even when they were not on the clock. When investors pressed Ford to build an automobile for the wealthy, he dismissed the idea. When Ford ordered the corporation to institute an eight-hour schedule and raise compensation to an average of $5 per day, he chose to keep his facilities open on three shifts to keep staff happy and output high (Tomac et al., 2019). Because Ford had reduced its vehicle expenditures, the higher wages were irrelevant, and the company could afford to pay them because more customers could now afford cars.
Mullally joined Ford in 2006 as a member of the board of directors and as CEO. Mulally was the president and CEO of Boeing’s commercial aircraft division before joining Ford (Warrick & Gardner, 2021). Business Week magazine recognized Mulally as an outstanding CEO in 2005, calling him one of the greatest CEOs of the year. Mulally’s most significant contributions to Boeing were to streamline production and change the way the company ran its commercial airline business. Mulally was a good leader in many ways, but he lacked one quality that Ford sought: the potential to reorganize the company’s commercial department. A company that was losing money before Mulally took over became overly profitable. Afar, Mullally seems to have applied situational leadership, a model under the contingency theory to change the company. He realized the readiness of employees and the situation of the company at the time and designed approaches for the problem. In the wrong run, Mullally is remembered as a revolutionary leader at Ford because of the change he caused.
Mulally has discussed how he leads such a large, global company in interviews and elsewhere. When asked how he leads, Mulally says that positive leadership is the key to his success. His efforts to change the organization demonstrate that serving at any level or size, for profit or not, is a basic honor. It is critical to have a clear vision and a comprehensive plan based on that vision. As a result, Mullaly’s perspective on positive leadership may appear to imply that there is always a way forward. To put it another way, Mulally and McArthur (2022) state that good leadership is open and honest with everyone. Previously, if a worker stopped producing a certain type of car because he believed it was unnecessary, one of the many senior managers would have complained (Mulally & McArthur, 2022). Mulally believed that instead of asking why he stopped production, the employee should be asked how the leaders can improve things. Mulally believed that providing a safe working environment would make employees feel more at ease. They can express their concerns and feelings, which helps them grow and makes them happier. This self-made leadership style ensures that leaders stay on task, look for solutions to problems, and celebrate victories. Another aspect of this is that bosses and employees should be able to communicate clearly and honestly with one another. Mulally’s success with a few new ideas demonstrates that sharing goals with employees and developing personal relationships with them leads to improved performance and increased revenue.
Mulally established the Business Plan Review (BPR) system at Ford, which all functional and business executives use and follow. A business process review (BPR) is an ongoing program that is checked and updated regularly to evaluate an organization’s plans. Mulally meets with business leaders almost every day and requests information on every aspect of the company (Mulally & McArthur, 2022). The global financial and economic situation is a common topic on these conferences’ agendas. They discuss topics such as the global job market, energy, technology, and population issues. This debate teaches leaders about the outside world and what the global market’s future holds. BPR assists people in making decisions by informing them of what consumers will accept. The BPR’s goal is to examine current economic and market trends around the world and forecast how they will change. This initiative is based on the idea that all stakeholders should be involved in decision-making. Mulally did not make decisions on his own but instead, he employed a leadership style known as “democratic leadership,” in which he asked other leaders to assist him in understanding the business and making sound decisions. Most of the company’s successes, such as increased employee engagement, satisfaction, productivity, and performance, can be attributed to this style.
Mulally’s leadership style was undeniably revolutionary, as he oversaw a significant shift in how Ford Motors operated and was perceived. The style could be described using the leader-member exchange (LMX) hypothesis. Different kinds of exchange relationships are postulated between superiors and followers in the LMX theory (Sa’adah & Rijanti, 2022). Furthermore, the quality of these relationships influences how well a group or organization functions. The LMX theory is effective at explaining how leadership influences how people behave in an organization. According to this theory, leaders should develop individual relationships with their subordinates based on how they work together. According to Mascareo, Rietzschel, and Wisse (2020), following the rules of LMX theory can help people become more creative. Even though Mulally was in charge, there were significant changes that have helped the company’s products perform well in the market. The LMX theory, which addresses the leadership style approach, is grounded in the social exchange theory. The social exchange hypothesis states that in a teaching partnership, the subordinate has an obligation to the superior to keep the relationship amicable (Chernyak-Hai & Rabenu, 2018). A series of talks in the didactic connection is used to establish the working relationship.
Goal-setting was essential under Mulally’s leadership. Goal orientation emphasizes the development of self-theories and teaches employees that hard work always leads to better results (Qi, 2019). Mulally’s primary method of running the company was to inform all employees of the company’s strategy. Everyone in the company is aware of the company’s objectives and strategies. This allows workers and other team members to become more acquainted with one another (Heide, von Platen, Simonsson, & Falkheimer, 2018). Mulally focused on outcomes and hung previous projects and performances next to each other, demonstrating his commitment to the company’s success, which had to be aligned with each individual’s performance. Mulally instilled trust in his employees, improving morale and the quality of their relationships. The findings are consistent with the LMX theory, which states that when management trusts employees and employees have a lot of freedom, things improve.
Mulally’s management style entails frequent communication with his employees. He insists on meeting with department and business leaders regularly and requests updates, which keeps them interested and committed. Mulally did not interfere with their work; instead, he discussed potential solutions. One of his favorite phrases, according to Mulally and McArthur (2022), is “What can we do to help you?” Ford’s approach to leadership evolved from one of autocratic dictatorship to one of very successful leader-member interaction that emphasized the need to include all team members. The change improved the company’s overall performance, transforming it from a losing business to a profitable one. Mulally’s leadership style was unsettlingly direct, honest, and positive. Mulally believed that one of the most important aspects of being a leader is focusing on the truth and personal beliefs. Ford gave each employee a card with the company’s strategy on one side and the company’s expectations on the other. As a result, all employees knew what they had to do for the company and their good.
Ford Motor Company is largely considered one of the world’s top automakers. The company has been around for a while and has a demonstrated track record of production. To stay profitable in the face of severe competition in the auto sector, the company implemented some restructuring measures as part of its business plan. Ford pursued its ‘One Ford’ business plan from 2006 to 2012 under the leadership of Mulally. The initiative was developed under the human resource (HR) to serve the global network of Ford business. At Ford, HR oversees several activities, including recruitment, selection, training, capacity expansion, promotion, demotion, and career progression. When Alan Mulally took over as CEO in 2006, he immediately implemented the ‘One Ford’ to stimulate growth per the company’s guiding ethos (Cameron, Quinn, DeGraff, & Thakor, 2022). First, this strategy emphasized the significance of a well-informed and enthusiastic workforce in achieving the automaker’s intended expansion. It was critical to quickly put together a winning team that would help the company’s bottom line. Management saw participation in major company decisions as a crucial driver of employee engagement. Even when work was delegated to teams, it was still the individual’s responsibility to deliver results.
As part of his ‘ One Ford ‘ program, Mulally urged Ford to build global models that could be easily changed for local markets. Ford believed that the strategy quadrupled the effectiveness of its product development procedures from 2006 to 2012. Mulally’s “One Ford” innovation framework was built around four pillars (Cameron et al., 2022). They included producing vehicles and trucks that customers want and need and leveraging Ford’s unparalleled automotive expertise and resources. Further pillars were assembling a global team comprised of all Ford employees and securing the massive funding required to make it happen. This meant that the individuals were factored into the overall strategy. The strategic decision to invest more in human resources paid off with improved earnings for the company.
Conclusion
In conclusion, analysis of leadership changes at Ford shows the results of different leadership styles. The predecessors of Mulally, including Henry Ford, were dictators, making decisions solely and requiring employees to follow the rules unquestionably. While the company survived then, Mulally is remembered for his great work in the company. He applied social exchange and LMX theories in his leadership, involving other corporation members in decision-making. Through modular transformation, productive relationships were formed, and the company made billions in profits. Leadership in this organization shows that success in an organization is based on leadership and management style.
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